Are the miserable more likely to rent or own?

There’s an article over in the Globe and Mail titled “The Rise of the Miserable Canadian Homeowner

They talk about some of the complaints people have over the cost of ownership and the recent inability for the Canadian consumer to live within their means.

But if homeowners are dissatisfied about how they’re managing their finances, we must also consider their single largest expense on month-by-month basis. That would be the mortgage payments they’re making on their homes.

The problem with housing is that it’s expensive compared to our incomes. I will document this further in an upcoming column, but for now let’s just say that mortgages plus other basic costs of day-to-day living, such as cars and daycare, may leave us with little money left over. And so we borrow more through credit lines and credit cards. That’s our unofficial second income.

The Manulife survey shows homeowners are not happy about how things are working out, which is noteworthy. We’ve been borrowing madly as a nation for the better part of five years now, and the story has so far been cast as one of imprudent behaviour. Here, we get a sense that there’s a cost in stress and angst.

Read the full article for a run down on the numbers of people happy vs unhappy with their household finances. Basically one in three homeowners are very unhappy with how they are managing their money.

 

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ILoveCharts
Guest
ILoveCharts
I’m a happy renter. My theory is that there are two types of renters. 1) The poor These are people who are renting because they can’t buy. They have poor credit ratings. They end up paying a lot of money to rent crappy apartments because those are the only landlords who will take them. These people feel like they are slaves to the system and that they are paying someones mortgage. 2) The smart These are people who have their finances in order but don’t want the limitations and risk of owning. They end up paying the same amount of money as the poor for rent but they get to live in much better apartments at the same price. They aren’t charged the “risk premium” that is charged to the poor renters. Landlords are always responsive to their concerns because… Read more »
ILoveCharts
Guest
ILoveCharts

P.S.
You may assume that happiness is a fluffy concept. You’d actually be surprised at the depth of academic rigor that is applied to the subject. The findings are interesting and very relevant to how we all choose to live our lives.

This report is a great starting point:
unsdsn.org/files/2013/09/WorldHappinessReport2013_online.pdf

tedeastside: I’d recommend giving it a read!

Softy
Guest
Softy

Sill no sign of fading sales due to expiring rate holds. I think yo will wait a decade for that prediction to come true.

New Listings 167
Price Changes 112
Sold Listings 130
TI:15541

mac
Member
mac

Most homeowners are like investors inasmuch as they are gleeful when their house is rising in price and depressed when the market declines. Combine that with the fact that most people believe in childish fantasies to make them happy (true love-romance for women/business success-dominance for men) and Martha Stewart/HGTV for homeowners and aspiring homeowners alike.

In my experience, happiness is intermittent and not based on objects but on people and experiences. I feel sorry for everyone who buys housing to feel safe and superior. Real Estate’s an industry folks, there are winners and losers in every deal.

ILoveCharts
Guest
ILoveCharts

We’re not waiting softy. We’re just continuing to live life without an inordinate portion of our wealth tied up in an overvalued asset.

Burt
Guest
Burt

“Manulife survey shows people are not happy about how things are working out”

I’m pretty sure 30% of people will never be happy about their finances… or life itself for that matter.

Guy Smiley
Member
Guy Smiley

I had an interesting conversation tonite with an acquaintance whose work revolves around the software used by credit rating agencies. It sounds like there is a lot of effort being spent to develop algorithms that will identify (and/ or justify lending to) individuals deemed un-creditworthy by the usual vetting process. It feels similar to the kind of effort employed to craftily use a knife when hunting the last remnants of peanut butter out of an almost empty jar.

jesse
Member

Hey guys.
I’m not understanding…
Guys.
Equity markets have increased 50% since 2011.
IG bond prices have gone up since 2008 even with the latest pullback.
Guys.
Help me out.
Why are people feeling dissatisfied?

squeako
Guest
squeako

I wonder if they are really unhappy with the house, or even their finances. The house if probably just fine, and their finances: why now all of sudden?

I have a feeling they are probably unhappy about their brains.

patriotz
Member

@1: “My theory is that there are two types of renters.”

You left out the third and probably largest group, those who rent because buying simply doesn’t fit their current lifestyle/life stage.

registered
Member
registered

@8 :”…Equity markets… IG bond prices … pullback…”

“Real estate always goes up” is easier to understand. People prefer their comfort zone whether it reflects reality or not.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

Syphilis ‘epidemic’ sparks campaign in Metro Vancouver

http://www.cbc.ca/news/canada/british-columbia/syphilis-epidemic-sparks-campaign-in-metro-vancouver-1.2431152

what’s the relationship between syphilis and renting?

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

“We’re not waiting softy. We’re just continuing to live life without an inordinate portion of our wealth tied up in an overvalued asset.”

if that was true, you would stop coming to this blog. you’re obviously waiting for a correction so that you can buy.

Rent$385
Guest
Rent$385

“A total of 2,132 homeowners aged 30 to 59 with household income of more than $50,000 were interviewed in September. Almost one in three of them is very unhappy with how they’re managing their finances”

Average home price in Canada: $390,000. Once upon a time you were recommended to have a household income of 1/3 of your mortgage, or $130,000 in this case. Anyone want to guess what the average household income of the 2,132 homeowners is? (let’s be kind and assume it’s the national average of $79,600 for a 2 person economic family.)

Basically, I’m surprised it isn’t greater than one in three. I think they lucked out with their survey respondents. Or maybe people are just trying to paint a rosy picture on it to make themselves feel better.

ILoveCharts
Guest
ILoveCharts

@12 Bull! Bull! Bull! Says:
“what’s the relationship between syphilis and renting?”

It’s pretty simple really. Renters don’t need to whore themselves out to make the mortgage payments so syphilis rates are much lower amongst renters.

Son of Ponzi
Guest
Son of Ponzi

The unhappy homeowners are those who have bought during the last 2 years.
They were brainwashed that prices can only up.
Now prices are coming down, and they feel screwed.

patriotz
Member

@14: “Basically, I’m surprised it isn’t greater than one in three.”

Like others, you are forgetting that most homeowners bought when prices were much lower – and interest rates were much higher.

Given this, what’s surprising is that as many as one in three are having problems.

Many Franks
Member
Two relevant bits of news — make of them what you will: OECD calls for Bank of Canada to more than double interest rates by 2015 The Bank of Canada may need to start hiking its trendsetting interest rate within the next year and steadily push it to 2.25 per cent by the end of 2015, according to an international think-tank representing the world’s leading economies. […] The OECD is also worried about the recent revival of Canada’s housing market, although the report most likely did not take into account last week’s news that existing home sales had fallen back by 3.2 per cent in October, the first dip since February. “If house-price pressures re-emerge, further macro-prudential measures may also be required,” it said. The Bank of Canada can restrain the housing market by hiking interest rates, but has signalled… Read more »
VMD@work
Guest
VMD@work

speaking of miserable Vancouver home owners…
Trial told owner wanted insurance
11/19/2013
She was late with the mortgage payments on her home and her credit card bills were growing.

And a few weeks before her Vancouver nail salon was set on fire, a financially distressed Trang Thein Dao Nguyen visited her insurance broker with an urgent request.

“She was in a rush to get insurance for her business,” prosecutor Jim Cryder told a judge at the opening of Nguyen’s arson trial Monday.

kabloona
Member
kabloona

I just wanted to comment on #150 of the previous thread:

“Federal workers rewarded with spa visits, jewelry, iPods, gift cards

http://globalnews.ca/news/973934/federal-workers-rewarded-with-spa-visits-jewelry-ipods-gift-cards/

Uh…..just to clarify, the “gifts” were only for some people at Treasury Board (i.e. the ones doling-out all the Federal money) and lorded over by Tony “Gazebo” Clement…..not any other Federal Workers.

Once upon a time I used to work for the Federal Government – and the only gift I got was 6 years of frozen wages….but that was back in the Mulroney/Chretien years.

😉

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

“It’s pretty simple really. Renters don’t need to whore themselves out to make the mortgage payments so syphilis rates are much lower amongst renters.”

such bitterness and anger. it’s your own fault you’re priced out for ever. the bulls all told you to buy, so don’t blame us.

just accept it and buy a place in prince george. the fundamentals are much better there.

Snake
Guest
Snake

Defence requests criminal responsibility evaluation in Calgary freeman case

http://globalnews.ca/news/976938/defence-requests-criminal-responsibility-evaluation-in-calgary-freeman-case/

Turkey
Guest
Turkey

@B! B! B!,

just accept it and buy a place in prince george. the fundamentals are much better there.

I agree. That’s why I probably already own a slice of RE in Prince George. The dividend pays out about 6%, and I never have to go there.

ILoveCharts
Guest
ILoveCharts
@21 Bull! Bull! Bull! Says: “it’s your own fault you’re priced out for ever. the bulls all told you to buy, so don’t blame us.” Actually no. I was in school. Then I took a few years to pay off my student loan. Then I saved for a responsibly sized down payment. I’ve only just recently arrived at a position where buying is a possibility. After taking a look around, I realize that today is not a good time to buy in this market and so I will wait. The people who will get the most burned are the virgins like me who decide to enter the market now because they are of the age when they expect they should own their place. I’m happy for the people who took advantage of the earlier opportunity and have profited from their… Read more »
Softy
Guest
Softy

Fitch is in the news with their soft landing prediction. They are probably right. Look at Vancouver condos – flat prices for five years after a huge run-up. There is your economic model – apply it to Vancouver houses and to the rest of Canada. There will be no crash.

The agency forecasts that home prices are in for a “soft landing” and will flatten out or decrease slightly over the next five years Read more: http://www.vancouversun.com/business/real-estate/Canadian+home+prices+flatten+decrease+over+next+five/9185000/story.html#ixzz2l7l8r4Uz

Also, Nobel Laureate Krugman states that the economy needs perpetual bubbles to avoid mass unemployment. If your monthly shelter expense is not adding to the asset side of your balance sheet, you will not beneift from the perpetual bubble economy(not so new actually, Krugman says it is been this way since the 1980s).

http://www.nytimes.com/2013/11/18/opinion/krugman-a-permanent-slump.html?src=me&ref=general

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